Which of the Following Transactions Does Not Have the Potential

question 99

Multiple Choice

Which of the following transactions does not have the potential of creating a constructive dividend?

• A)compensation paid by a corporation to a shareholder-employee
• B)purchase of corporate property by the shareholder
• C)shareholder's rental of corporate property
• D)All of the above can result in a constructive dividend.

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Definitions:

Direct Labor Hours

The total number of hours worked by employees directly involved in manufacturing a product or providing a service, often used in calculating labor cost and efficiency.

Machine Hours

A measure of the amount of time a machine is operated, used in costing to allocate expenses based on how long a machine has been in use.

Setup Cost Per Unit

The cost associated with configuring or preparing equipment for manufacturing a batch of products, divided by the number of units produced.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or facility to allocate indirect costs to products.